Key Insights
- Bitcoin and the rest of the Crypto market performed extraordinarily throughout 2024.
- Crypto hedge funds, in particular, gained a lot of profits between 200% and 50%.
- The most prominent performers include Tephra Digital, Pythagoras Investments, Eltican Asset Management, and Fasanara Digital.
- The bull run is far from over, and 2025 will be even more transformative for the Crypto space.
The year 2024 was a game-changer for the Crypto market.
Bitcoin broke above the $100,000 mark for the first time in its 15-year history, and the total Crypto market cap soared by an impressive $1.7 trillion YTD.
Amid this bullish frenzy, several Crypto hedge funds emerged as big winners and capitalized massively on the rally.
Here’s how top Crypto hedge funds like Tephra Digital, Pythagoras Investments, Eltican Asset Management, Fasanara Digital, and many others rode the wave of 2024’s market boom.
We also take a look at what sets them apart from traditional hedge funds, as well as what this means for the future of Crypto investments.
The Crypto Market’s Record-Breaking Year
Several favorable events drove Bitcoin’s stellar performance in 2024.
Some of these included the approval of the Bitcoin Exchange-Traded Funds (also known as the ETFs) in the U.S.
This milestone did much to boost institutional confidence in Bitcoin and Crypto as a whole.
It also attracted billions in fresh capital to the Crypto space, explaining the near-$2 billion general market-cap surge.
However, the rally wasn’t limited to Bitcoin because the altcoin market saw significant gains.
This market exuberance provided terrific opportunities for hedge funds specializing in Crypto to shine.
Top Performers in the Crypto Hedge Fund Arena
Tephra Digital, based in the U.S. and backed by Jefferies’ Leucadia Asset Management, was among the biggest winners of 2024.
The fund saw an impressive 100.2% gain thanks to its data-driven strategies and deep market insights.
Tephra Digital manages around $125 million in assets and demonstrated how specific strategies can yield massive returns during bullish periods.
Pythagoras Investments came in second and delivered incredible results through its strategies.
The hedge fund’s flagship Absolute Return Fund gained 41.8%, while its Quant Long-Short Fund achieved a 30% return.
Interestingly, the smaller Alpha Long Biased Strategy, which combines Bitcoin exposure with proprietary trading models, was the best performer overall.
It outperformed even Bitcoin’s 121% rally and delivered a staggering 204% return.
Overall, this diversified approach helped Pythagoras to grow its total assets under management (AUM) from $80 million in 2023 to over $230 million in 2024.
This is impressive, considering how it is a nearly 300% rally.
Other Top Performers
On the other hand, the London-based Eltican Asset Management impressed with a 33% return from its market-neutral fund.
This fund, co-founded by former Winton portfolio manager Mehdi-Laurent Akkar, focused on minimizing exposure to market volatility.
This was especially effective and capitalized well on the periodic price inefficiencies throughout the previous year.
As it stands, the fund now manages $90 million in assets with its practical risk-adjusted approach.
Fasanara Digital, another London-based player, saw a 24% increase in 2024.
The hedge fund’s current AUM is $190 million, and it targets growth to $300 million by mid-2025.
Between 2024 and now, Fasanara’s focus on digital assets has set it apart as a major part of Europe’s Crypto hedge fund ecosystem.
Crypto Hedge Funds vs. Traditional Hedge Funds
While Crypto hedge funds thrived, many traditional hedge funds struggled to keep up.
The S&P 500, for example, rallied by 24%. This move contributed substantial gains for some equity-focused funds, as we will soon see.
Discovery Capital, for example, posted a 52% return, while DE Shaw’s Oculus Fund gained 36%.
However, compared to the performance of Crypto funds like Pythagoras’ Alpha Long Biased Strategy, these results show a clear divide between traditional and crypto-based funds (especially during bull runs).
Even leading traditional hedge funds like Bridgewater Associates and Citadel saw relatively modest gains of 11% and 15%, respectively, with their flagship funds.
The high fees of these platforms, as well as other issues like lower-than-market returns, were major issues for these funds.
Many investors were left questioning the value proposition of traditional hedge funds compared to low-cost ETFs.
Why Crypto Hedge Funds Excelled in 2024
So why did these Crypto hedge funds excel within the year?
Some of the significant factors contributing to this bullish trend might have been regulatory tailwinds.
The approval of the Bitcoin ETFs in the U.S. created a ripple effect that boosted investor confidence and the liquidity of the market as a whole.
Although Donald Trump’s campaign promises of a leadership change later in the year did much to cause two new all-time highs for Bitcoin in the latter half of the year.
The innovative strategies of these winning hedge funds likely had a role to play as well.
Funds like Pythagoras used AI-driven models and arbitrage strategies, among others, to maximize their returns.
Finally, the high volatility of Crypto itself, as well as institutional adoption, created numerous opportunities for hedge funds to capitalize on through active management.
Institutional players even provided a solid foundation for the market in terms of ETF launches and investment.
The Challenges They Had To Face
Despite their success, Crypto hedge funds also faced challenges.
For instance, Pythagoras’ Alpha Long Biased Strategy experienced a 2% drawdown in December as Bitcoin crashed from its record high.
The high performance-based fees often charged by Crypto hedge funds also made them less attractive to cost-sensitive retail investors at intervals.
A Bullish Outlook Ahead
The momentum from 2024’s bull run is likely to continue into 2025.
Analysts generally believe that the bull run is far from over, and factors like regulatory developments will likely drive growth further.
Pythagoras Investments’ CEO Mitchell Dong expects the incoming U.S. administration to play a pivotal role.
The ongoing proposals for a national Bitcoin reserve could also complement pro-crypto legislation to increase demand for digital assets.
If one country successfully creates a national Bitcoin reserve, it will trigger a race in which other nation-states follow in MicroStrategy’s footsteps.
A Year to Remember
The 2024 bull run was a transformative one for Crypto hedge funds. Going further, the regulatory environment and growing institutional interest should boost these funds’ ability to thrive in volatile markets.
As the Crypto industry matures, these hedge funds are poised to play an even more significant role in shaping the future.
Investors seeking high returns and diversification options will have more options to choose from.
Bitcoin Year In Review And What To Expect From 2025
Bitcoin had a stellar performance throughout 2024, rising by nearly 200% from a low of $36,600 to a peak of $108,300 by mid December.
The cryptocurrency then reversed and began January 2025 at around $92,000.
Some of the contributing factors to this growth included the launch of the spot Bitcoin ETF market in the US in January.
The much-expected Bitcoin halving also happened on 19 April 2024, and reduced block rewards from 6.25 BTC to 3.125 BTC.
As expected, the market reacted significantly to the halving, with Bitcoin seeing a 146% surge in price.
The lower supply and greater scarcity brought on by the ETFs and the halving played a huge role in the cryptocurrency’s pump to the $108,300 mark.
At the time of writing, Bitcoin has reversed from this price level, and is trending slightly above the $90,000 price level.
This price level is the cryptocurrency’s last line of support, and a break below might trigger a crash down below to the $70,000 zone.
Still the bullish momentum remains intact with the cryptocurrency, with analysts generally expecting a new all time high between the $150,000 and $300,000 zone.
Analysts like Timothy Peterson for example, who is famous for predicting the 2024 bounce, predicted that Bitcoin will never trade below $10,000 again.
He also predicted that the cryptocurrency will hit $1.5 million before the next decade.
Renowned analyst Michael van de Poppe even expects a new all time high around January 2025, as long as Bitcoin breaks above the $100,000 mark again.
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